Jefferson County Public Schools has a top-heavy bureaucracy, with too many administrators who are paid too much — robbing resources that could be used for classroom instruction, a major state audit has found.

A 260-page report released Wednesday by state Auditor Adam Edelen found that the district pays 369 administrators more than $100,000 a year — more than Kentucky's 281-person executive branch.

The yearlong audit compared JCPS with five school districts across the United States, and found that the district spent the most on administrative costs and the least on instruction.

JCPS also had the smallest percentage of employees who were teachers — 43 percent — and the highest percentage of administrators, at nearly 10 percent.

The audit also found that the district's school board generally lacks the "depth of understanding required to actively examine or question the budget effectively without significant reliance on JCPS staff," which it said is "not conducive for proper oversight."

"This report paints a picture of a bureaucracy that benefits itself and keeps the board in the dark, rather than supports excellence in the classroom and a public mission of transparency and accountability," Edelen said in a statement.

The review, conducted at the school board's request at a cost of roughly $125,000, wasn't meant to focus on any allegations of "waste, fraud and abuse" or on individual schools, Edelen said, and no criminal wrongdoing was uncovered. It concentrated on the district's central office.

"We know of no other district in the country that has invited this level of scrutiny," Edelen said during a Wednesday morning press conference held at the central office to discuss the audit's findings. "The courage to do that welcomes a chance for reform."

Superintendent Donna Hargens said Edelen's recommendations will "better our operations." She added that the district already has taken a number of steps recommended by the audit, including freezing central office staff and administrative salaries in 2012-13, increasing instructional spending, starting a review of policies and planning to revamp internal auditing.

"It is clear that we share the same core belief — that our children must be at the center of our universe," Hargens said Wednesday. "I can assure you that JCPS is not standing still and that complacency has no place in our work."

The district will provide a full response within 60 days and present the school board with a plan to implement changes, she said.

District officials did take issue with the auditor's choice of data, saying the audit focused on fiscal 2010-11 spending — before Hargen's administrative cuts were in place. More recent data was available for four of the five districts the auditors used to compared with JCPS, district spokesman Ben Jackey said.

"Since 2010-11 ... we have spent an additional $24 million in the classroom," Jackey said. "The vast majority of that is teacher raises and professional development."

Suffering by comparison

In what Edelen described as the office's largest review, staffers spent a year examining the administration of the state's largest school system, which serves more than 100,000 students on a budget of nearly $1.2 billion.

The audit compared the district's central office and administration with similar school districts in Austin, Texas; Baltimore County, Md.; Charlotte-Mecklenburg, N.C.; Cobb County, Ga.; and Pinellas County, Fla.

The report said one of JCPS' weaknesses was the district's failure to test itself against its peers.

It found JCPS ranks at or near the bottom in teacher staffing and expenditures for instruction, while ranking highest in the categories of administrators, support staff and instructional aides.

The district had the second-highest student-to-teacher ratio, and ranked the lowest in instructional spending, at 53 percent of its budget (four of the other five were 60 percent or higher), while ranking highest in administration and operations spending, at 31 percent of its budget.

"The number of school administrators and support staff as a percentage of total staff is nearly double the rate of one of the benchmark districts," Edelen said.

Compared with three peer districts, JCPS central office employees are paid a higher average salary and have more employees earning over $100,000 annually. Employees working for the central office exceeded the next highest average at Cobb County School District by $5,866 and the lowest reported average at Charlotte-Mecklenburg by $18,551.

It also found that JCPS students face more restrictions on access to textbooks and other classroom resources than many Kentucky districts. Compared with its peer districts, it had the lowest textbook budget — mostly because the state provides no funds. More than half of teachers said students couldn't take home textbooks.

In addition, the central office provides limited monitoring of textbook funding. Instead, that spending is decided by individual schools — which get $20 per elementary and middle school student, and $40 per high school student for books.

A survey of more than 1,500 of JCPS' 6,400 teachers also found that nearly half said their schools provided inadequate instructional resources for all students. Partly as a result, more than 90 percent of teachers spent personal funds to supplement classroom resources.

"Most spend hundreds of dollars a year," Edelen said in the release. "A teacher should have the prerogative to use personal resources for the classroom, but no teachers should feel they have to due to a lack of funding."

Lack of understanding

When it comes to governance, the audit found that school board members generally lack "a depth of understanding" to question the budget effectively, the report found.

Edelen noted that some board members admitted to not knowing what some budget line items really meant and were not regularly revisiting the actual spending in comparison to the budget.

He also said the board lacks a committee structure to provide a detailed level of oversight of financial and audit matters. The audit recommends adding two at-large board members to the seven-member group, along with better training for members and creating a budget subcommittee.

"A seven-member board is not sufficient to govern a $1.2 billion organization, particularly one that cries out for a little more global perspective," Edelen said, noting that the board "has not actively examined or questioned staff" in budget matters.

Some board members questioned Edelen's intentions.

While acknowledging that the board sought the review, member Carol Haddad said the results indicate "this was a political thing; he's going to use this and then announce his plans to run for governor. ... He's based this all on running for governor, and I think that's terrible."

Edelen denied any political motivation.

"But if I were to run for governor, I would run on a platform of having done some very big things," he said. "The JCPS audit is a very big thing."

Kentucky Education Commissioner Terry Holliday applauded Edelen for his "vigilant oversight of how taxpayer dollars are being spent."

"It is imperative that JCPS operate with the utmost efficiency and transparency, with every dollar possible going toward classroom instruction, especially with the large achievement gaps that exist ... and the number of low-performing schools," Holliday said. "I am confident that the district will take swift action on the recommendations in this report."

Contract concerns

The audit also found a lack of monitoring and oversight from the central office of district contracts, which numbered more than 1,700 during the review period. The district does not maintain a central database of those contracts, which Edelen called "unacceptable."

Auditors also identified contracts that are allowed to renew an unlimited number of times without board approval, including some as high as $146,000. Instances also were noted of payments made for invoices and construction change orders that did not comply with contract terms or lacked required supporting documentation, the report said.

The audit also took issue with a range of policies governing spending by employees, including purchasing card expenses that didn't have easy-to-access supporting documentation and travel reimbursement guidelines that were vague and lead to inconsistencies.

While a review of 287 travel reimbursements found most had proper approvals and documentation, some charges "seemed to accommodate personal comfort" such as extra leg-room fees and valet parking charges.

Oversight lacking

The report also found oversight lacking in some areas. For example, internal auditors — who examine school-activity funds, attendance and other areas — report to the superintendent and not the school board, as Edelen recommends. The audit also found inadequate policies "to investigate, monitor, or report hotline complaints."

"No serious abuses or waste were found at the central level, but it doesn't mean it didn't occur in the past or that it couldn't occur in the future," Edelen said. "When you don't have adequate and consistent controls over things like travel, credit cards, leave time, take-home cars and cellphones you are increasing that risk."

More than a dozen findings centered on information technology, including those involving "security vulnerabilities and describe a situation where students and employees may be potentially exposed to the inadvertent loss or intentional theft of private, confidential data."

Edelen has conducted audits in a number of other school districts, including Dayton Independent, where the former superintendent was found to have received $224,000 in unauthorized benefits and payments. Other audits found excessive travel and resulted in resignations.

Edelen said the 200 recommendations in his JCPS audit could save taxpayers tens of millions of dollars, reduce the risk for fraud and abuse, and increase transparency.

School board Chairwoman Diane Porter said the review would "further empower this board to confidently guide JCPS on its road to becoming the best urban school district in the country."

Reporter Chris Kenning can be reached at (502) 582-4697. Follow him on Twitter at @ckenning_cj. Reporter Antoinette Konz can be reached at (502) 582-4232. Follow her on Twitter at @tkonz. Reporter Andrew Wolfson can be reached at (502) 582-7189. Follow him on Twitter at @adwolfson.

What's next:

Kentucky State Auditor report contains more than 200 recommendations that Auditor Adam Edelen believes will save Jefferson County Public Schools taxpayers tens of millions of dollars, reduce the risk of fraud and abuse and increase transparency. JCPS will submit a 60-day status report and has agreed to provide additional updates in six months and one year.